The Five Most Damaging Ideas GOP Candidates Have For Social Security

Last night, Social Security was the topic of much discussion during the first Republican presidential debate. New Jersey Gov. Chris Christie expounded on his proposals to raise the retirement age and means test benefits. Former Arkansas Gov. Mike Huckabee countered by proposing a tax increase that would include “illegals, prostitutes, pimps, drug dealers, all the people that are freeloading off the system now.”

But several Republican presidential candidates have also already opined on how they would fundamentally change Social Security. Some, such as Sen. Ted Cruz (TX), have made their views previously known, while others, including Sen. Marco Rubio (FL), have released fully formed proposals as part of their campaigns.

Here are the five most damaging ideas Republicans have offered up:

1. Raise the retirement age. Workers who have paid into Social Security have to wait until a specific age before they can receive full retirement benefits. In the past, the full retirement age was 65, but it has been gradually increasing and will eventually reach 67 for people born in 1960 and later. Retirees can still claim Social Security at age 62, but their benefits will be reduced significantly if they do. These permanent benefit reductions are greater the earlier somebody claims Social Security and the higher the full retirement benefit age is. Some conservatives, including Cruz and Paul as well as former Florida Gov. Jeb Bush, have now called for raising the full retirement benefit age even further –- for instance, to 69 years. This translates into across-the-board benefit cuts due to Social Security’s formula, which yields a larger amount for every month a worker delays claiming retirement benefits up to age 70. And it translates into especially deep cuts for workers who must retire early. These cuts are particularly harmful to lower-income workers and people of color.

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2. Raise the early retirement age. Some, such as Christie, have also proposed raising the early retirement age to 64. This moves critical retirement benefits out of reach for older workers who need to retire for health, family, or economic reasons in their early 60s. And for all the hardship it would cause, it would yield minimal improvement in Social Security’s long-term finances.

3. Privatize the program. Social Security is funded primarily through current workers’ payroll tax contributions. Cruz, Bush, and Sen. Rand Paul (KY) have all supported privatization, which would divert a portion of Social Security’s payroll tax revenue into individual retirement accounts. This means that Social Security will receive a lot less money to pay for promised benefits, forcing it to borrow money or cut payments, and the benefits will become a lot less secure since they will heavily depend on the ups and downs of financial markets. Imagine how much worse the retirement crisis would have been if people had invested their Social Security money in the stock market during the recent financial downturn.

4. Means-test benefits. Social Security benefits are tied to a worker’s pre-retirement earnings. Workers with higher earnings generally will receive higher benefits. This link to earnings makes Social Security a crucial source of earned insurance, and Social Security’s universality explains why the program enjoys widespread public support. Christie and Rubio have suggested phasing out retirement benefits for higher-income earners. Under Christie’s proposal, for instance, somebody earning more than $200,000 would receive no Social Security benefits, even if they paid into the system all their lives. Phasing out benefits for higher-income beneficiaries through means-testing would fundamentally change Social Security by breaking the link to earnings and undermining its broad-based public support. Additionally, this proposal would do very little to improve its solvency.

5. Switch to a stingier benefit formula. The Social Security benefits of each new cohort of retirees currently increase as wages overall increase so that retirees can reap some of the fruits of their past contributions to the economy. However, tying the initial benefit to inflation instead of wages, as Cruz has proposed, would cut benefits for each new generation of retirees. For instance, after 30 years, benefits would be about 30 percent lower. This is worse than doing nothing –- no benefit or tax increases –- where benefits would be about 21 percent lower. Had this type of formula been in effect since Social Security was created in 1935, today’s benefits would reflect the living standard of an era when many households did not have indoor plumbing.

Amid rising inequality, declining employer-sponsored benefits, and high levels of household debt, and with about half of working-age Americans unprepared to maintain their standard of living in retirement, Social Security is more important than ever for American workers and their families.